EXHIBIT 10.1
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement") is made and entered
into as
of December 18, 2006 by and among FOH Holdings, Inc., a Delaware
corporation
(the "Company"), Movie Star, Inc., a New York corporation
("Parent"), Tokarz
Investments, LLC, a Delaware limited liability company ("TI"),
Fursa Alternative
Strategies LLC (formerly known as Mellon HBV Alternative Strategies
LLC, a
Delaware limited liability company ("Fursa"), Fursa's affiliated
and/or managed
funds and accounts listed on paragraph (a) of Schedule 1 hereto
(the "Fursa
Managed Accounts" and, together with TI, the "Stockholders," and
individually, a
"Stockholder"), Fursa SPV LLC, a Delaware limited liability company
and Fursa
Master Rediscovered Opportunities Fund L.P., a Delaware limited
partnership.
Capitalized terms used and not otherwise defined herein shall have
the
respective meanings set forth in the Merger Agreement described
below.
RECITALS
WHEREAS, pursuant to the Agreement and Plan of Merger and
Reorganization
dated as of the date hereof by and among Parent, Fred Merger Corp.,
a Delaware
corporation and a wholly-owned subsidiary of Parent ("Merger Sub"),
and the
Company (such agreement as it may be amended, is hereinafter
referred to as the
"Merger Agreement"), Parent has agreed to acquire the outstanding
securities of
the Company pursuant to a merger of Merger Sub with and into the
Company (the
"Merger") in which each outstanding share of Company Common Stock
will be
converted into the right to receive Merger Consideration as set
forth in the
Merger Agreement; and
WHEREAS, the execution and delivery of this Agreement by the
Stockholders
is a condition to the consummation of the Merger under the Merger
Agreement.
NOW, THEREFORE, the parties agree as follows:
1.
Shares.
1.1
Ownership of Shares. Each Stockholder represents and warrants
to Parent that: (i) in the case of TI, such Stockholder is, and in
the case of
the Fursa Managed Accounts, the Stockholders included therein in
the aggregate
are, (and will be until the Expiration Date, unless Transferred (as
defined
below) pursuant to Section 1.3), the registered and beneficial
owner(s) of such
number of issued and outstanding shares of Company Common Stock as
is indicated
on Schedule 1 hereto (the "Shares") with full and sole power to
vote or direct
the voting of all Shares; (ii) the Shares constitute such
Stockholder's entire
interest in the outstanding capital stock and voting securities of
the Company;
and (iii) the Shares are held by such Stockholder free and clear of
any Liens. A
Person shall be deemed to have effected a "Transfer" of a security
if such
Person directly or indirectly (i) sells, pledges, encumbers, grants
an option
with respect to, transfers or otherwise disposes of such security
or any
interest therein (including any voting interest), or (ii) enters
into an
agreement or commitment providing for the sale of, pledge of,
encumbrance of,
grant of an option with respect to, transfer of or disposition of
such security
or any interest therein. As used herein, the term "Expiration Date"
shall mean
the earlier to occur of (i) the Effective Time or (ii) termination
of the Merger
Agreement in accordance with the terms thereof.
1.3
No Transfers of Shares. Each Stockholder hereby agrees that,
at all times during the period commencing with the execution and
delivery of
this Agreement until the Expiration Date, except for a Transfer
under the Merger
Agreement, such Stockholder shall not cause or permit any Transfer
of any of the
Shares to be effected, or discuss, negotiate or make any offer
regarding any
Transfer of any of the Shares without the prior written consent of
Parent's
independent directors, provided that, notwithstanding the
foregoing, subject to
Section 10.2, a Stockholder shall not be restricted from effecting
a Transfer of
any Shares to any member of such Stockholder's immediate family, to
a trust for
the benefit of such Stockholder and/or any member of the
Stockholder's immediate
family, any of such Stockholder's Affiliates or any other person
managed fund or
managed client account over which such Stockholder exercises
investment
authority, including without limitation, with respect voting and
dispositive
rights. For purposes of this Agreement, "immediate family" means
the
Stockholder's spouse, parents, siblings, children or grandchildren.
1.4
No Transfer of Voting Rights. Each Stockholder hereby agrees
that, at all times commencing with the execution and delivery of
this Agreement
until the Expiration Date, such Stockholder shall not deposit, or
permit the
deposit of, any Shares in a voting trust, grant any proxy in
respect of the
Shares, or enter into any voting agreement or similar arrangement
or commitment
with respect to any of the Shares (other than, in each case, this
Agreement).
2.
No Solicitation. During the period from the date of this Agreement
through the Expiration Date the Stockholders shall not, and shall
not direct,
authorize or permit any of their respective officers, directors,
employees,
agents, advisors, Affiliates and other representatives, (such
Persons,
collectively the "Representatives"), and shall direct and use its
best
reasonable efforts to cause the Representatives not to, directly or
indirectly,
(a) initiate, solicit or encourage (including by way of providing
information)
the submission of any inquiries, proposals or offers or any other
efforts or
attempts that constitute or may reasonably be expected to lead to,
any Company
Acquisition Proposal or engage in any discussions or negotiations
with respect
thereto or otherwise cooperate with or assist or participate in, or
facilitate
any such inquiries, proposals, discussions or negotiations or (b)
accept a
Company Acquisition Proposal or enter into any agreement or
agreement in
principle providing for or relating to a Company Acquisition
Proposal or enter
into any agreement or agreement in principle requiring the Company
to abandon,
terminate or fail to consummate the transactions contemplated by
the Merger
Agreement or breach its obligations thereunder. The Stockholders
shall
immediately cease and cause to be terminated any existing
solicitation,
encouragement, discussion or negotiation with any Persons conducted
theretofore
by the Stockholders or any Representatives with respect to any
Company
Acquisition Proposal.
3.
Merger Consideration; Indemnification Claims. Each Stockholder
acknowledges and agrees that, in accordance with the terms of the
Merger
Agreement, such Stockholder will receive as Merger Consideration,
the Effective
Time Shares and the Company Supplemental Distribution Shares
(together with cash
in lieu of fractional shares of Parent Common Stock, if any, as
specified in the
Merger Agreement) and that the Company Escrowed Shares are being
placed in
escrow as the sole, exclusive and maximum recourse for each and
every claim,
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liability, obligation, loss, damage, deficiency, assessment,
encumbrance,
judgment, cost, expense (including, without limitation, reasonable
attorneys'
fees and costs and other expenses incurred by any Parent
Indemnified Person in
investigating, preparing, defending against or prosecuting any
litigation or
claim, action, suit, proceeding or demand), of any kind or
character arising out
of or resulting from any breach of any representation, warranty,
covenant,
agreement or certification made by or on behalf of the Company in
the Merger
Agreement or pursuant to a Sales Tax Claim and such Stockholder
agrees to the
provisions of Section 4.2, 4.3 and Article X of the Merger
Agreement as if such
Stockholder was a party thereto. Pursuant to Section 4.1 of this
Agreement, each
Stockholder is appointing the Company Stockholder Representatives
to execute and
deliver on its behalf the Escrow Agreement substantially in the
form attached as
Exhibit A (the "Escrow Agreement") and to act on its behalf in
connection with,
among other things, all matters under the Escrow Agreement,
including, without
limitation, the resolution of all indemnification claims under the
Merger
Agreement.
4.
Stockholder Representatives.
4.1
Each Stockholder hereby irrevocably constitutes and appoints
Patrick Brennan and Michael Tokarz as its joint representatives
(the "Company
Stockholder Representatives") and its true and lawful attorneys in
fact, with
full power and authority (coupled with interest) in each of their
names and on
behalf of each of them:
a)
to, as applicable, act on behalf of each of them with
respect to any provisions of this Agreement, the Merger Agreement,
the
Escrow Agreement or any other agreement contemplated hereby or
thereby;
and
b)
in general, to, as applicable, do all things and to
perform all acts, including executing and delivering all
agreements,
certificates, receipts, instructions and other instruments
contemplated by
or deemed advisable to effectuate the provisions of this Section
4.1.
4.2
Parent and the Escrow Agent shall be entitled to rely upon any
document or other paper delivered by the Company Stockholder
Representatives as
(i) genuine and correct and (ii) having been duly signed or sent by
the Company
Stockholder Representatives, and neither Parent nor such Escrow
Agent shall be
liable to any Stockholder for any action taken or omitted to be
taken by Parent
or such Escrow Agent in such reliance. In the event of death,
disability or
resignation of a Company Stockholder Representative, Parent and the
Escrow Agent
shall be entitled to rely on any and all actions of the remaining
Company
Stockholder Representative, until such time as they receive notice
of the
appointment of a new Company Stockholder Representative, which
appointment shall
require the mutual consent of Fursa, acting on behalf of the Fursa
Managed
Accounts, on the one hand, and TTG on the other.
5.
Mutual Releases. On or before the Effective Time, each Stockholder,
on the one hand, and the Company, on the other hand, shall duly
execute and
deliver in favor of the other, releases in the form of Exhibit B.
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6.
Mellon HBV Debt Holders Covenants.
6.1
Each of Fursa SPV LLC and Fursa Master Rediscovered
Opportunities Fund L.P. (collectively, the "Fursa Debt Holders"),
in its
capacity as lenders under the Amended and Restated Tranche A/B and
Tranche C
Term Loan Agreement, dated June 30, 2005, among the Credit Parties
named therein
and the Fursa Debt Holders, as amended by that Amendment No. 1,
dated July 20,
2005 and Amendment No. 2 dated November 23, 2005 among the Credit
Parties named
therein and the Fursa Debt Holders (the "Fursa Debt Agreement")
hereby consents
to the Merger and all of the transactions contemplated by the
Merger Agreement
and waives (i) any future event of default that may exist as of the
Effective
Date under the Fursa Debt Agreement solely as a result of the
Merger and the
transactions contemplated by the Merger Agreement, including
without limitation,
any breach of the negative covenants contained in Article VIII and
Section 4.14
of the Fursa Debt Agreement, (ii) any right to notices it may have
under any of
the provisions in the Fursa Debt Agreement solely as a result of
the Merger and
the transactions contemplated by the Merger Agreement, and (iii)
any prepayment
penalties owed on the Fursa Debt Agreement in connection with a
prepayment for
amounts owed thereunder as a consequence of a refinancing of such
debt or the
cancellation of such debt pursuant to Section 6.2 herein.
6.2
The Fursa Debt Holders hereby agree that concurrently with the
consummation of the transactions contemplated under the Merger
Agreement, they
shall cancel a portion of the total outstanding indebtedness under
the Mellon
Debt Agreement (the "Fursa Debt") held by them as of the Effective
Date in the
aggregate amount of $7,500,000 in exchange for receiving from
Parent that number
of shares of Parent's Series A 7.5% Convertible Preferred Stock
("Preferred
Stock") equal to the quotient obtained by dividing 7,500,000 by the
average
daily closing price of the shares of the Parent Common Stock, for
the twenty
(20) trading days immediately preceding the record date of the
Rights Offe
